There would seem to be few parallels between Apple, the consumer electronics powerhouse, and British Airways, the United Kingdom’s genteel airline, yet its CEO and former Apple numbers cruncher, Keith Williams, thought it made perfect sense to jump from one to the other.
Both companies, says Williams, offer excitement and cutting-edge innovation (think iPod and the business-class flat bed), so when it came time to return home from his Apple office in Paris, the financial guru headed straight to British Airways.
Williams was in town this week to celebrate the debut of nonstop service between San Diego andLondon, a flight that the airline has experimented with previously in San Diego, but ultimately opted to terminate for varying financial reasons. British Airways believes that the daily flight in and out of San Diego will be successful this time because of an alliance forged with American Airlines allowing the two carriers to share revenues on London routes.
Williams, formerly the chief financial officer for British Airways, was promoted to CEO in January after its merger with Iberia. But long before that, Williams was faced with the daunting task of rebuilding the airline after the terrorist attacks of Sept. 11, 2001, which led to a widespread downturn in air travel.
The process of returning the airline to profitability was not unlike the rebuilding period that Apple underwent in the late 1990s and beyond when co-founder Steve Jobs resumed leadership of the company and launched one new groundbreaking initiative after another.
“The computer industry is fast-moving and exciting, and the airline industry is exciting,” said Williams, a soft-spoken, slight man who exudes a calm demeanor. “We’re evolving against a backdrop of events happening all the time, and we’ve had 9/11 and SARS (Severe Acute Respiratory Syndrome), volcanic ash, snow and all of that. You learn from each event, so getting our customers through those events is exciting for everyone in the industry, and then it’s about recovery for the customer.”
Williams sat down for an interview this week during a brief stay at the Grand Del Mar resort.
Q: What made you decide to leave Apple for British Airways?
A: I was based in Paris, and my children were at an age where they’d grown up French and were speaking French, so it was a question of were they going to speak French or speak English, so we decided we better to go back to the U.K. Apple was such a great company. A lot of people on the outside look at BA as being innovative, like the Concorde, the flat bed, check-in capability with mobile devices, we were ahead of the pack. So BA is respected for innovation, much like Apple.
Q: British Airways has attempted direct and nonstop flights to San Diego before, and they ultimately were abandoned. Why do you feel strongly that this latest effort will be successful?
A: You’ve got a number of things that came together. The history is that the two times before, in terms of volume, the routes were quite well supported both ways. What we needed was a slightly better mix of business and nonbusiness. What American (Airlines) does is give us access to the corporate market. They have a presence here, which we did not. The other thing that’s different is the big governmental presence here, and BA didn’t have access to the Fly America program, so government passengers couldn’t travel on BA. The other thing, our business overall to the U.S. has picked up quite well over last 12 to 18 months. If you look at the international and particularly the transatlantic, the capacity is back to the level of 2008 for all airlines.
Q: Can you really expect to be flying full planes in and out of San Diego regularly?
A: If you look at the business market out for the next several months, from here to September that’s strong. Coach has tended to lag generally. But even coach has picked up quite well over last several months. When you start a new route, it takes time for a new route to get established. It can take about 18 to 24 months to get profitable. Where it helps with San Diego is we are the only European carrier flying direct, so you’re coming with a new offering rather than trying to play a market that’s already established. So we’re seeing bookings ahead of what we expected. Premium travel tends to be about 70 percent. You don’t need full occupancy to be profitable.
Q: We’ve heard some complaints from travelers that the airfare on the British Airways flights is higher than on competing airlines flying that route, although they’re not nonstop. Might that be an impediment to success?
A: That’s the trade-off, really. People will tend to get a cheaper price if they’re willing to go through a stop. We aim to be a premium carrier. I don’t think it is an impediment at all. What you have to look at is the market in London and San Diego, and is there a market for people who want to travel direct. On previous occasions, you can demonstrate the volumes were there but not the mix, and it’s that mix that gives you the edge to a profitable route.
Q: How much interest is there among travelers in the United Kingdom in coming to San Diego as opposed to simply vacationing in Northern California or the Los Angeles area?
A: I do think there is the interest, because you have some very good attractions, and it’s a well-known destination. A lot of people will come to California to experience the whole of California. They see San Diego and tend to come back again.
Q: Typically, when a new route or flight is introduced, there are discounted introductory fares. Were such fares offered with this flight?
A: It’s a case of supply and demand, and we saw enough demand (without offering introductory fares). Do we need to promote the route? No, it promotes itself. The bookings are strong enough going forward to justify the fare structure we’ve got. (British Airways expected to offer a sale next week for all its gateways for travel into the fall.)
Q: If the daily inbound and outbound flight proves successful, what are the prospects for additional flights, or is there even enough of a market for expansion?
A: We’ve got flights out of San Francisco, Los Angeles and San Diego. In the immediate term, that looks like a good spread. I don’t think it will support a second flight. But if the market warranted it, we could put a bigger aircraft here.
Q: The new nonstop flight has been touted by San Diego’s tourism industry leaders as a way to boost visitor spending here. What sort of boost, if any, do you expect in spending in London and beyond from the flight?
A: You’ve got fantastic attractions over here, so San Diego is a good tourist attraction, and we want to attract visitors to London, without need to transfer through Los Angeles, and we have a number of coming events in London: the Queen’s (Diamond) Jubilee, the 2012 Olympics, and London is a pretty cosmopolitan destination. Everything helps. It’s all incremental.
Q: San Diego is hoping to attract more nonstop international flights. What do you see as the pluses and minuses of Lindbergh Field for overseas flights?
A: In terms of an airport, it’s a nice-size airport. L.A. is clearly much bigger, but you have the attraction of a smaller airport that’s easy to get through. One of the things people look for is the ease of entry, and that’s something our customers look at in terms of (customs). We’re not looking at San Diego as a hub but a destination, so we’re not looking for the airport to expand.
